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FAF Q2 Earnings Top Estimates on Title Strength, Investment Income
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Key Takeaways
FAF beat Q2 earnings and revenue estimates on strong commercial title business and higher investment income.
Direct premiums, escrow fees and average revenues per order increased, boosting Title segment margins.
Higher expenses partly offset gains, while buybacks and dividends returned capital.
First American Financial Corporation (FAF - Free Report) reported second-quarter 2026 operating earnings of $2.08 per share, which beat the Zacks Consensus Estimate by 15.6% and rose 35.9% year over year.
Operating revenues climbed 15% to $2.1 billion, driven by growth in direct premiums, escrow fees, and Information and other revenues. The top line surpassed the consensus estimate by 4.4%.
The quarterly results benefited from robust commercial title business, higher average revenue per order, solid investment income growth and continued strength in information and subservicing businesses. Elevated operating expenses partly offset these gains.
First American Financial Corporation Price, Consensus and EPS Surprise
Direct premiums and escrow fees reached $794.1 million, marking a 14.8% increase from the prior-year level. The figure exceeded the Zacks Consensus Estimate and our model estimate by 2.3%.
Investment income totaled $183.7 million in the second quarter, up 14.7% year over year, supported by higher interest income from the investment portfolio. The title segment increased 12% in investment income, partially offset by losses at the corporate level. The figure was above our estimate and the Zacks Consensus Estimate of $182.3 million.
Expenses increased 11.4% to $1.83 billion, primarily due to higher personnel costs, production expenses, premiums retained by agents and a rise in interest expense. The figure was above our estimate of $1.80 billion.
FAF’s Segmental Results
Title Insurance and Services: Total revenues rose 16.9% year over year to $2 billion, which beat the Zacks Consensus Estimate by 6.2%. This was driven by 15% growth in direct premiums and escrow fees, agent premiums and steady net investment income. Investment income increased 11% to $164 million, supported by higher interest income from the company's investment portfolio.
Adjusted pretax margin expanded 310 bps to 15.7%. Title open orders increased 0.7% to 188,200, while closed orders declined 0.7% to 137,300. Average revenue per direct title order increased to $4,572, reflecting a 31% increase in commercial average revenue per order, partially offset by a mix shift toward lower-premium refinance transactions.
Home Warranty: Total revenues rose 3.3% to $113.8 million, exceeding our model estimate of $111 million. Pretax income climbed 8.5% year over year to $24.2 million. The claim loss rate improved to 40%, due to lower claim frequency, partly offset by higher claim severity. Pretax margin expanded 110 basis points to 21.3%.
Corporate: The Corporate segment reported a net pretax loss of $56.2 million, narrowing from a $43.8 million loss in the year-ago quarter.
FAF’s Financial Update
First American exited the second quarter of 2026 with cash and cash equivalents of $2.6 billion, up 89.6% from the 2025-end level. Notes and contracts payable were $1.5 billion, remaining flat from the 2025-end level.
Stockholders’ equity was $5.6 billion at the end of the second quarter of 2026, up 2.2% from the 2025-end level. The debt-to-capital ratio was 31.4.
Capital Deployment
The board of directors paid a dividend of 55 per cent per share in the second quarter. FAF repurchased 0.3 million shares for $20 million in the reported quarter at an average price of $61.99 per share.
The Progressive Corporation’s (PGR - Free Report) second-quarter 2026 earnings per share of $4.85 beat the Zacks Consensus Estimate by 3.2%. The bottom line, however, decreased 6.1% year over year. Net premiums written were $21.1 billion in the quarter, up 5% from $20.1 billion a year ago.
Net premiums earned grew 6% to $21.6 billion, in line with the Zacks Consensus Estimate. Net realized gains on securities were $604 million, up 56% year over year. The combined ratio, the percentage of premiums paid out as claims and expenses, deteriorated 110 basis points from the prior-year quarter’s level to 87.1.
The Travelers Companies, Inc. (TRV - Free Report) reported second-quarter 2026 core income of $10.04 per share, which beat the Zacks Consensus Estimate of $5.21 by 92.7%. The bottom line climbed 54% year over year. Revenues of $12.09 billion missed the Zacks Consensus Estimate of $12.27 billion by 1.5%.
Net investment income rose 14% year over year to $1.07 billion pre-tax ($883 million after tax). The combined ratio improved 670 basis points year over year to 83.6%, reflecting lower catastrophe losses, stronger reserve development and a better underlying combined ratio.
W.R. Berkley Corporation (WRB - Free Report) reported second-quarter 2026 operating income of $1.27 per share, which beat the Zacks Consensus Estimate by 16.5%. The bottom line increased 21% year over year. W.R. Berkley’s net premiums written were about $3.4 billion, up 2.4% year over year. The figure surpassed our estimate of $3.4 billion.
Operating revenues totalled $ 3.8 billion, up 3.6% year over year. The top line surpassed the consensus estimate by 1.87%. Net investment income grew 10.4% to $418.7 million, supported by higher invested assets and higher portfolio yields. The figure topped our estimate of $407 million. The Zacks Consensus Estimate was $395.6 million.
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FAF Q2 Earnings Top Estimates on Title Strength, Investment Income
Key Takeaways
First American Financial Corporation (FAF - Free Report) reported second-quarter 2026 operating earnings of $2.08 per share, which beat the Zacks Consensus Estimate by 15.6% and rose 35.9% year over year.
Operating revenues climbed 15% to $2.1 billion, driven by growth in direct premiums, escrow fees, and Information and other revenues. The top line surpassed the consensus estimate by 4.4%.
The quarterly results benefited from robust commercial title business, higher average revenue per order, solid investment income growth and continued strength in information and subservicing businesses. Elevated operating expenses partly offset these gains.
First American Financial Corporation Price, Consensus and EPS Surprise
First American Financial Corporation price-consensus-eps-surprise-chart | First American Financial Corporation Quote
What’s Behind the Headlines for FAF?
Direct premiums and escrow fees reached $794.1 million, marking a 14.8% increase from the prior-year level. The figure exceeded the Zacks Consensus Estimate and our model estimate by 2.3%.
Investment income totaled $183.7 million in the second quarter, up 14.7% year over year, supported by higher interest income from the investment portfolio. The title segment increased 12% in investment income, partially offset by losses at the corporate level. The figure was above our estimate and the Zacks Consensus Estimate of $182.3 million.
Expenses increased 11.4% to $1.83 billion, primarily due to higher personnel costs, production expenses, premiums retained by agents and a rise in interest expense. The figure was above our estimate of $1.80 billion.
FAF’s Segmental Results
Title Insurance and Services: Total revenues rose 16.9% year over year to $2 billion, which beat the Zacks Consensus Estimate by 6.2%. This was driven by 15% growth in direct premiums and escrow fees, agent premiums and steady net investment income. Investment income increased 11% to $164 million, supported by higher interest income from the company's investment portfolio.
Adjusted pretax margin expanded 310 bps to 15.7%. Title open orders increased 0.7% to 188,200, while closed orders declined 0.7% to 137,300. Average revenue per direct title order increased to $4,572, reflecting a 31% increase in commercial average revenue per order, partially offset by a mix shift toward lower-premium refinance transactions.
Home Warranty: Total revenues rose 3.3% to $113.8 million, exceeding our model estimate of $111 million. Pretax income climbed 8.5% year over year to $24.2 million. The claim loss rate improved to 40%, due to lower claim frequency, partly offset by higher claim severity. Pretax margin expanded 110 basis points to 21.3%.
Corporate: The Corporate segment reported a net pretax loss of $56.2 million, narrowing from a $43.8 million loss in the year-ago quarter.
FAF’s Financial Update
First American exited the second quarter of 2026 with cash and cash equivalents of $2.6 billion, up 89.6% from the 2025-end level.
Notes and contracts payable were $1.5 billion, remaining flat from the 2025-end level.
Stockholders’ equity was $5.6 billion at the end of the second quarter of 2026, up 2.2% from the 2025-end level. The debt-to-capital ratio was 31.4.
Capital Deployment
The board of directors paid a dividend of 55 per cent per share in the second quarter. FAF repurchased 0.3 million shares for $20 million in the reported quarter at an average price of $61.99 per share.
Zacks Rank
FAF currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Insurers
The Progressive Corporation’s (PGR - Free Report) second-quarter 2026 earnings per share of $4.85 beat the Zacks Consensus Estimate by 3.2%. The bottom line, however, decreased 6.1% year over year. Net premiums written were $21.1 billion in the quarter, up 5% from $20.1 billion a year ago.
Net premiums earned grew 6% to $21.6 billion, in line with the Zacks Consensus Estimate. Net realized gains on securities were $604 million, up 56% year over year. The combined ratio, the percentage of premiums paid out as claims and expenses, deteriorated 110 basis points from the prior-year quarter’s level to 87.1.
The Travelers Companies, Inc. (TRV - Free Report) reported second-quarter 2026 core income of $10.04 per share, which beat the Zacks Consensus Estimate of $5.21 by 92.7%. The bottom line climbed 54% year over year. Revenues of $12.09 billion missed the Zacks Consensus Estimate of $12.27 billion by 1.5%.
Net investment income rose 14% year over year to $1.07 billion pre-tax ($883 million after tax). The combined ratio improved 670 basis points year over year to 83.6%, reflecting lower catastrophe losses, stronger reserve development and a better underlying combined ratio.
W.R. Berkley Corporation (WRB - Free Report) reported second-quarter 2026 operating income of $1.27 per share, which beat the Zacks Consensus Estimate by 16.5%. The bottom line increased 21% year over year. W.R. Berkley’s net premiums written were about $3.4 billion, up 2.4% year over year. The figure surpassed our estimate of $3.4 billion.
Operating revenues totalled $ 3.8 billion, up 3.6% year over year. The top line surpassed the consensus estimate by 1.87%. Net investment income grew 10.4% to $418.7 million, supported by higher invested assets and higher portfolio yields. The figure topped our estimate of $407 million. The Zacks Consensus Estimate was $395.6 million.